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Dollar Gains on Interest Rate Speculation

The dollar climbed to its highest rate in a month against the euro as speculation grows that the Federal Reserve [1] could raise interest rates sooner than previously expected. Last Fridays Non-Farm Payroll report was much better than anticipated and while job losses still outpace job creation, the job loss rate appears to be slowing faster than expected.

“On the U.S. dollar front we now have an early indication on the level of volatility that a shift in monetary policy can trigger,” Khurram Butt, in the Treasury sales division of Europe Arab Bank Plc in London, wrote in a client note. “Before the job report, the chances of a June Federal Reserve rate hike was implied at only 35 percent, but this jumped to above 50 percent after the unemployment number came out.”

Bloomberg [2]

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Scott Boyd

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